All,

we have been seeing a lot of cases come into support about this issue after installing Update 2. Here is a wiki that will walk you through the resolution steps.

TROUBLESHOOTING: Failed to retrieve schema or cannot connect to database while creating a FIM MA

http://social.technet.microsoft.com/wiki/contents/articles/9112.troubleshooting-failed-to-retrieve-schema-or-cannot-connect-to-database-while-creating-a-fim-ma.aspx